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Liberty Mutual Insurance Company, et al. v. Patrick Morrisey, Attorney General

Liberty Mutual Insurance Company, et al. v. Patrick Morrisey, Attorney General

Case No. 
13-0195
Type of Proceeding: 
Appeal from the Circuit Court of Kanawha County (Judge King)
Issues: 

Do W.Va. Code §§ 46A-1-101, et seq. and 46A-6B-1, et seq. require an automobile insurer and/or the automotive repair shop it selects to repair a damaged vehicle to notify and obtain consent from the vehicle’s owner to repair the vehicle using recycled automotive parts?

Background: 

The plaintiff, The State of West Virginia, through the Office of the Attorney General, filed a civil suit against the defendants, Liberty Mutual Insurance Company and Greg Chandler’s Frame & Body, LLC, an automotive repair shop favored and used by Liberty Mutual to make property damage repairs to Liberty Mutual insured vehicles.  The plaintiff’s suit alleged that the defendants violated the West Virginia Automotive Crash Parts Law, W.Va. Code § 46A-6B-1, et seq. and the West Virginia Consumer Credit and Protection Act, W.Va. Code § 46A-1-101, et seq. by intentionally concealing from consumers the fact that their new vehicles, defined as vehicles less than three years old, were being repaired with crash parts retrieved from salvaged vehicles, defined as recycled genuine OEM crash parts.

The defendants filed a motion to dismiss which the circuit court converted to a motion for summary judgment.  Following a period of discovery, the plaintiffs moved for summary judgment and to dismiss the defendants’ counterclaim seeking declaratory judgment.  After hearing oral argument from the parties on their respective motions, the circuit court granted the plaintiff’s motion for summary judgment and motion to dismiss and denied the defendants’ motion to dismiss.

Positions of the Parties: 

Petitioner:

 The Petitioner, Liberty Mutual, argues that the circuit court erred in granting summary judgment without giving Liberty Mutual sufficient time to conduct discovery.  The Petitioner also argues that the circuit court erred in basing its summary judgment ruling on an unpublished, 1988 decision in the case of West Virginia Autiomotive Dismantlers and Recyclers Association, et al. v. McGraw, et al., C.A. 97-C-2797.  In support of its position, the Petitioner argues that circuit court opinions have no precedential value and that, as a non-party to the 1998 case, Liberty Mutual is not bound by that decision.  The Petitioner also argues that the circuit court overreached by applying the Crash Parts Law to recycled OEM genuine crash parts and by including such parts in the definition of aftermarket crash parts without first determining the Crash Parts Law was ambiguous.  The Petitioner further argues that the circuit court erred by finding that the use of recycled genuine OEM crash parts voids a consumer’s warranty, because West Virginia law does not define what type of parts are sufficient to maintain a manufacturer’s warranty and the circuit court failed to consider application of the federal Magnuson-Moss Warranty Act, 15 U.S.C. § 2301, et seq. The Petitioner further alleges that the Attorney General has improperly characterized recycled genuine OEM crash parts as “junk parts,” which has influenced vehicle owners to insist upon the use of only genuine OEM crash parts in the repair of their new vehicles.

Respondent:

The Respondent, The State of West Virginia, alleges that Liberty Mutual requires the use of salvage crash parts when negotiating the repairs of motor vehicles by automotive body shops without the motor vehicle’s owner’s consent in writing and that this practice violates the Crash Parts Law.  The Respondent also alleges that defendant, Chandler, failed to provide notice or obtain written consent from vehicle owners regarding salvage crash parts and that Chandler knew how to comply with the law, but simply chose not to do so.

The Respondent further alleges that the Petitioner had ample time to conduct discovery, but could not produce sufficient evidence to rebut the Respondent’s properly supported motion for summary judgment.  The Respondent argues that the circuit court was correct to consider the 1988 decision because it was the same court deciding the same legal issue and because the decision was widely distributed (one of the parties was the West Virginia Insurance Federation, Inc., an organization that counted the Petitioner, Liberty, as a member at one time).  The Respondent also argues that Liberty complied with the 1988 Order until June of 2010.

The Respondent alleges that the Consumer Credit and Protection Act and Crash Parts Law were enacted to both give notice to consumers of the type of crash parts being used to repair their vehicles and to prevent the use of aftermarket crash parts without the consent of the vehicle owner.  Thus, the Petitioner’s failure to notify consumers of the use of salvage crash parts is an unfair or deceptive act or practice under the law.  The Respondent argues that Petitioner and defendant, Chandler, could comply with both the Consumer Credit Protection Act and Crash Parts Law, but they have simply chosen not to comply.  The Respondent further argues that the circuit court did find the Crash Parts Law to be ambiguous and properly construed the Law in favor of the consumer, who is least able to protect herself when dealing with body shops and insurance companies.  The Respondent argues that the Magnuson-Moss Warranty Act is inapplicable to the facts of the case because the vehicle manufacturer, not Liberty Mutual or Chandler, is the warrantor under the Act.

 

Probable Impact: 

This case could have important ramifications in the realm of consumer law.  The Petitioners do not deny that they concealed the fact that consumers’ vehicles were being repaired with recycled, salvage crash parts.  Instead, they believe the law permits them to conceal from vehicle owners that such parts are being used to repair new vehicles.  The case boils down to whether insurance companies and body shops can use recycled OEM crash parts, salvaged from wrecked vehicles, instead of new parts in the repair of vehicles without informing, or getting consent from, the vehicle’s owner.

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